As we begin the New Year the work from 2021 continues as we await further negotiations on the Build Back Better Act (BBB) and the FY 2022 budget. Nothing is certain in the current political and economic environment, especially with COVID continuing to affect all aspects of the economy. 

On BBB we do not believe they are any closer to reaching a compromise with Senator Manchin as the focus of the Senate and White House turned to voting rights. Once the voting rights debate assuages, substantive negotiations on BBB will resume with a focus on trimming provisions in the bill and making it more palatable to our friend from West Virginia. We are cautiously watching this process to safeguard our $11 billion in LIHTC resources and the larger affordable housing allocation for HUD and USDA. It is anyone’s guess on how this process will proceed and as I have said on numerous occasions, nothing is certain in Washington until the President signs the legislation. We are confident in the support that exists for the LIHTC and have been working on a Plan B in case BBB does collapse or housing is jettisoned from the package. 

Plan B would center on an omnibus that would include the FY 2022 budget and an accompanying tax package. Unlike the work on BBB, this would be a bipartisan process so Republican support for the LIHTC will be vital. It is our hope the tax package would include more than expiring tax provisions, although extenders could absolutely include the 12.5% allocation increase that end on 12/31/2021. A larger package could include the 50% test reduction, our basis boost provisions and potentially some other AHCIA provisions that had support from both parties on both sides of the Hill. Thus, our constant push for bipartisan advocacy which has been the key to our successes over the years. 

We also continue to work on regulatory relief from the IRS. The Service just recently released guidance on COVID PIS deadlines which, while we had hoped to have before the end of the year, do include extension of critical deadlines. Based on conversations with the Service and Administration staff, we hope to soon have guidance on the Average Income Test, which is the final set of items on the Services “watch list.” 

Treasury also recently released their Final Rule on uses of State and Local Federal Relief Funds. A number of states as well as the industry had requested relief from the rule covering the awarding of grants for affordable housing production with the LIHTC, specifically for-profits. Despite requests from stake holders, Treasury left in place the rule requiring a reduction of basis for any grants issued to for-profits for the production of housing utilizing the LIHTC. We are working with Hill and Administration advocates to reverse this ruling. 

So, as you can see there is much work to be done. I so appreciate all the efforts of CHC and our many colleagues across the country as we endeavor to increase affordable housing resources at every level. Thank you and have a happy and healthy 2022.